Where To For AXA, AMP and NAB?

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By Doug Grant

As [my clients] know I have been on a bit of an AMP/ further consolidation within the financial sector tack since the beginning of the year. Not only do I firmly believe that AMP is in the sights of one of the banks, but with the share price in the $6.20’s, I believe that it is a good investment on fundamentals alone as well, as long as the global equity markets hold in. That being the case I just wanted to quickly draw your attention to a couple of articles that I saw in the press today.

The one attached below is by SMH journalist Ian Verrender. He argues that due to Craig Dunn’s blunder in declaring the sweetened bid late last year “best and final”, it may well cost AMP it’s future as an independent company. As such AMP is hoping that the ACCC will have trouble with AMP’s bid, because in their eyes if that is the case those difficulties “will be magnified with NAB’s overture and the regulator will place so many restrictions on NAB that its deal will almost be unworkable.”

The article finishes with the argument that even though the market believes that if NAB ties up with AXA, then AMP will be a protected species, this may well not be the case as AMP no longer has the market power it once had. In fact he argues below….

“The only way it could become a pillar would be to regain the kind of market share it controlled in the 1980s and 1990s, before it almost blew itself up. And so the only way it could become a protected species – a fifth pillar – would be to succeed in its AXA acquisition. Catch 22.”

The second article that caught my eye is on page 48 of the Fin Review. It is titled “Westpac finds template”.. It states that “Westpac’s success in rolling out its no-frills BT Super for Life across St George and Bank SA will become a template for using customer relationships to sell across a range of financial products.” Brad Cooper chief executive of BT Financial Group states “We are trying to understand why customers have multiple relationships with financial service providers and how to take down those barriers”

This implies to me, as I have mentioned before and what my contacts in the financial planning sector have mentioned, is that banks want all their products and distribution under one roof and as far a reach as possible. Mr Cooper goes onto to say “ it is about our current product set-how to design better products and leverage the close relationships our branches have with customers”

It only stands to reason then in my eyes that this “land grab” for distribution and product is far from over and with AMP at these levels they must surely be in the sights of these big banks. Don’t forget this snippet that was in the SMH the other week.

AMP (Pg. 2 Biz Day): "The board meeting this month mapped out a defence strategy should one of the big 4 banks begin to circle the company. The logical poison pill defence would be for AMP to take out a regional bank. "

Doug Grant is an advisor at Minc Stockbroking.

Company codes that apply to the story above include ((AMP)), ((AXA)), ((CBA)), ((WBC)), ((NAB)), ((ANZ)), ((BOQ)), ((SUN)) and ((BEN)).

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